Gold
On the back of recent moves, it is clear that gold prices will end 2019 well into positive figures. Currently around 15% higher on the year, gold is due to close out its best year since 2010. The rally in gold prices over the year has been in no small part due to the persistent uncertainty caused by the US-Sino trade war. However, gold has also been supported by lower interest rates in the US as the Federal Reserve was forced to abandon policy normalisation and move back into reducing its headline Federal funds rates.
Even now, as the US and China have agreed to an initial “phase one” trade deal, gold prices remain well supported by investors. The reason for this is due to residual caution over US-Sino trade negotiations, weakness in the Dollar as well as Trump’s impeachment.
Looking into the start of 2020, investors will want to see the US and China quickly moving onto the next round of trade talks. With some of the bigger issues of the trade standoff between the two nations yet to be discussed, there is still a fear that the trade war will take much longer to resolve completely. Trump’s impeachment adds further caution here as proceedings will likely impact negotiations. Additionally, the threat of Trump losing his presidency could see a change in economic policy in the US under a new president which could impact the path of markets, the Dollar and gold.
Silver
Silver prices too are due to end the year at highs with price currently sitting around 15% higher on the year also. Silver prices have had an interesting time recently. The boost in safe-haven flows for gold has helped keep silver supported due to the correlation between the two metals. A weaker Dollar as a result of Fed easing has also helped keep silver in demand from investors. However, the prospect of an end to the trade war between the US and China has also been a supporting factor due to expectations of increased industrial demand. This week, investors will be waiting for the FOMC meeting minutes which are likely to expand on the Fed’s message of cautious optimism keeping upside limited in the Dollar.
Technical View
XAUUSD (Bullish above 1475.12)
XAUUSD From a technical viewpoint. Gold continued higher above the monthly pivot at 1475.12 last week, confirming the break above the bearish trend line. With longer-term VWAP flipping positive here, continued upside looks likely with any retest of the trend line likely to find support.
XAGUSD (Bullish above 17.2958)
XAGUSD From a technical viewpoint. Silver continued higher last week, breaking further above the bearish trend line. Price has also broken above the monthly pivot at 17.2958 with longer-term VWAP flipping positive. Though currently stalled at the monthly R1, continued upside is expected.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!